Tomorrow’s transport

Why Ford is taking e-scooters for a Spin 

E-scooters are everywhere and even Ford has gone along for the ride. Robert Scammell speaks with John Lippe, director of city engagement at Ford Mobility, to find out why the 118-year old automobile maker is backing two wheelers. 

Spin is riding the wave of e-scooter startups taking over the streets across the globe. Since being acquired by the Ford Motor Company in 2018 for approximately $100m, the micromobility company has left its US home market and is now quietly gaining on its rivals on the roads of Europe. The deal marked the 118-year old automobile maker’s biggest move into the market segment and has enabled Spin to avoid some of the pitfalls its rivals have fallen into.

VCs love throwing money at e-scooter startups. In recent years they have pumped more than $1bn into companies operating networks of the two wheelers, which are unlocked via a smartphone app and paid for by the minute. 

The two largest US-based players are Santa Monica-based Bird and San Francisco-based Lime. Both founded in 2017, the two startups have to date scooped up $623m and $945m in funding, respectively. 

Other players in Europe have also entered the fray. Swedish firm Voi has raised $355.9m, while German startup Tier Mobility has netted $381m, including backing from Japanese investment giant SoftBank. 

Much of this funding came during a hype-fuelled frenzy in 2017 and 2018 that helped push the valuations of several of these young companies past the $1bn mark. VCs are backing these largely loss-making startups in the hope that e-scooters become the next micromobility trend for so-called first and last-mile transportation in urban hubs. 

Spin was founded in 2016, around the time several of its larger rivals entered the fray. However, the deal with Ford has provided it with a unique framework to compete against its competitors.

Spin is not under the pressure quarter to quarter that some of these venture capital-backed organisations are to deliver volume.

The fact that Spin is the only e-scooter startup that isn’t VC-backed comes with its own “significant advantages”, according to John Lippe, director of city engagement at Ford Mobility.

“[Spin] can take a much longer-term view, a more sustainable approach,” Lippe tells Verdict Magazine. “They are not under the pressure quarter to quarter that some of these venture capital-backed organisations are to deliver volume, irrespective of whether volume is the right thing to do.”

Instead, Spin is able to pursue growth with the safety net of a mature, $52bn parent company with decades of experience in transportation. 

According to Lippe, the “unique” setup gives Spin the opportunity to “scale more quickly” and “accelerate their growth strategy” thanks to the “security” of Ford’s ownership. 

Prior to Ford’s acquisition, Spin didn’t have any operations outside of the US, where it had networks across university campuses. Lippe says that Ford’s connections and resources have helped Spin increase its footprint in Europe, where it now operates in cities across Germany and the UK.

Spin in the driving seat 

Today, Spin is a subsidiary of Ford but operates with a completely separate management structure and brand, which works closely with Ford Mobility – the automaker’s division for investing in emerging mobility services and connectivity solutions. 

Its stated aim is to “deliver new transport initiatives and address urban transportation challenges”. 

According to Lippe, Spin has maintained its autonomy since the acquisition. He rejects the suggestion that Ford selected Spin because it was less established than rivals such as Bird or Lime, which would make it easier to mould the company in Ford’s own direction. 

“We know what we’re good at Ford Motor Company, and we know the advantages of a company like Spin and their innovation mindset […] We certainly wouldn’t want to stifle that in any way,” he says. 

Lippe claims Ford decided to acquire Spin, rather than partner with it, because the two companies shared compatible philosophies and it made greater business sense.  

“It was an opportunity that came along,” says Lippe. “One of the reasons we were very comfortable with Spin was their philosophy. We’ve been pretty consistent over the past two or three years in mobility. [We] believe collaboration is absolutely key.”

This attitude extends outside of the two organisations. Ford and Spin are “proactively” working with cities to understand the policy problems that need solving – an area that Ford Mobility is well-versed in. 

We know the advantages of a company like Spin and their innovation mindset. We certainly wouldn’t want to stifle that in any way.

“I think Spin are pretty unique in the micromobility field in that they had that philosophy right from the get-go, right from the very beginning of the company,” explains Lippe. “They don’t go in and provide solutions where they haven’t had that collaboration and direct permission from the city and they’re pretty much unique in that.” 

Other e-scooter companies might dispute this assessment. But it cannot be denied that e-scooter operators have caused problems in cities, particularly when they’ve arrived unannounced.  

When e-scooters suddenly appeared all over US streets in 2017 and 2018, their sheer volume created street clutter that ended up blocking some pathways. 

Paris, the e-scooter hub of Europe with an estimated 20,000 vehicles on the streets, was forced to introduce fines and penalties for reckless e-scooter riders after a rise in pedestrian collisions and e-scooters lining the bottom of Parisian rivers. 

But as the nascent market has matured, startups have been forced to work more closely with regulators – or invest in lobbyists to keep governments on side. 

Safety first

One way that e-scooter startups have sought to reassure regulators is by pointing to the steps they’ve made to improve safety. Most e-scooter companies are keen to point to safety as their competitive advantage. Spin is no different, with Lippe describing Spin’s safety features and training as a “differentiator”.  

One technology is geofencing, which controls the locations that e-scooters can be used in. The reality is that geofencing, speed limits and other technologies are widespread among the operators. Fierce competition has forced what was once a differentiator into a bare-minimum baseline that’s needed to keep regulators onside. 

The next frontier in e-scooter safety is using sensors and cameras to detect pedestrians. Spin is currently exploring this with smart city sensor startup Vivacity, which has created smart camera technology to understand interactions between cyclists and pedestrians with e-scooters, as well as with motor vehicles. 

There’s a lot of synergy between the sort of data you can pull off a scooter and the data that we have available from vehicles and thinking about how we can really optimise that to improve road safety and reduce accidents.

This is where Ford’s ownership may pay dividends. Its decades of experience in car safety means it has a wealth of data to pour over and apply to Spin. 

There’s a lot of “synergy” between Spin and Ford in this area, argues Lippe. This includes Ford’s Innovate UK programme called Road Safe, which sees it work with Transport for London, Loughborough University, Oxford County Council and Vivacity to look at how vehicle data can “enhance” e-scooter safety. Spin is looking at ways to pull this data and apply it to e-scooters. 

“We obviously have a strong interest in vehicle data and how we can use it more intelligently,” says Lippe. “And so there’s a lot of synergy between the sort of data you can pull off a scooter and the data that we have available from vehicles and thinking about how we can really optimise that to improve road safety and reduce accidents.” 

Lippe hopes that gleaning these insights from the data can demonstrate to authorities and the general public that e-scooters are a safe mode of transport. 

“Anything we can do in that space is not only the right thing to do ethically it’s good business sense as well.” 

Business model

With rental e-scooters charging around $0.10 - $0.30 to use per minute, the margins for operators are wafer-thin. Factor in maintenance costs and marketing and it become a steeper challenge to recoup the cost of e-scooter hardware. 

As with other consumer-facing tech industries, such as ride-hailing apps, this effectively means VCs are subsidising cheap rides. 

“It’s all very well attracting venture capital backing but you ultimately need a sustainable business model that works for the long term,” says Lippe. 

Some firms, including Lime, Tier and Voi claim to have achieved profitable or break-even quarters. But as private companies it is difficult to get a clear picture of how successful their business models really are. 

Lippe declines to give a timeline for Spin becoming profitable, but said progress so far had been “pretty encouraging” in 2020 – despite Covid. 

For now, the company is focused on growing its presence outside of the US, where its dockless e-scooters can be found in 50 cities and more than a dozen university campuses. 

It has also launched rental e-scooter networks in locations across Germany and more recently in the UK, where a trial period is currently underway to legalise the two wheelers. 

Spin has won tenders for Basildon, Chelmsford, Colchester. Its first UK launch was in Milton Keynes last August.

“I was there at the launch event and I was thinking ‘are we going to have any customers?’” recalls Lippe. “There was almost tumbleweed blowing through the main square in Milton Keynes.”

But in December Spin passed 40,000 rides in Milton Keynes, with Lippe adding that the signs have so far been encouraging. 

You’ve got early adopters who are won over and who are fans, but we have to bring the general public with us.

Spin has also applied for the potentially lucrative London tender, which will be fiercely competed for by other vendors. 

Concerns were raised about the UK’s e-scooter trials after several incidents of reckless use made headlines, including teenagers driving them on the motorway. 

But Lippe says that “everything is to play for” in terms of the e-scooter trial leading to full legalisation, and that winning the “battle of public opinion” is one of the biggest challenges. 

Members of disability groups have raised concerns about silent e-scooters posing a risk to vulnerable pedestrians. 

“You’ve got early adopters who are won over and who are fans, but we have to bring the general public with us,” says Lippe. “And that’s not just those who are likely customers, but those who we’ve got to co-exist with, whether that’s pedestrians or cyclists, car drivers or taxi drivers.” 

Despite this and the evolving legislative and regulatory landscape, Lippe is confident that rental e-scooters will become an everyday part of city transport infrastructure.  

For now, Spin is focused on expansion in Europe, with plans to launch in Spain this year. VC-backed mobility startups will likely be paying close attention.